The Inevitability of technology dependence in the Accounting Industry
Opinion, Personal Finance, Strategy
Chilombo Katongo (KPMG Zambia)

I vividly remember sitting in that lecture theatre as a third-year Computer Science student, (2015, DMI-ST.EUGENE UNIVERSITY) when one of our lecturers informed us that as a requirement, we were to undertake “Principles of Accounting” as a mandatory course. As you would guess, this did not make sense to many of us at the time. However, this undertaking got me (an IT professional) thinking about how much influence and impact Information Technology has and will continue to have on the Accounting industry.

It is ‘a no brainer’ that new technologies are birthed nearly every day. The rapidly evolving relationship between Information Technology and Accounting proves that the two disciplines need to co-exist. The term Accounting Information System (AIS) was coined; the phenomenon refers to all software applications and systems that are solely built for enhancing Accounting processes or procedures.

Suffice to say, we are indeed living in a new era; (informally called the Computer age) which has ultimately translated into Artificial Intelligence AI-i.e. the phenomenon of machines/systems becoming more cognitive and imitating human thinking processes. The accounting industry as you would know has not been spared by AI.  We can trace far back at the famous Automated Teller machine (ATM) which has been in existence for almost 5 decades.

The Impact of Artificial Intelligence on “the Big Four Firms”

One might wonder why the big 4 Audit firms (KPMG, PWC, Deloite & EY) have invested huge sums of dollars in the technology sector; Artificial Intelligence to be precise. It has been noted that the firms listed above have resolved that technology could greatly enhance efficiency, revenues and most importantly enhance End-Customer benefits and the decision making processes. According to an article by Emerj (a renowned business analytics publisher and Researcher), all the big four firms are currently involved in some form of Artificial Intelligence Lab undertakings.

Of interest, I looked at KPMG which has built its portfolio of Artificial Intelligence tools called Ignite. ‘KPMG Ignite’ is designed to enhance business decisions and processes on a digital platform. KPMG is also using Artificial intelligence- AI to analyse and extract information from Leasing or investment agreements.

Additionally, KPMG signed a ‘participation agreement’ with IBM in June 2016. This saw KPMG’s Senior Vice president (cognitive solutions and IBM Research) John Kelly, give a press release. And I quote:

Auditing and similar knowledge services are increasingly challenged with tackling immense volumes of unstructured data. Cognitive technologies such as Watson can transform how this data is understood and how critical decisions are made. By applying Watson, KPMG is taking a forward-looking approach to extending its expertise, helping professionals and clients gain new insights from critical enterprise information”  

Another insight in the case of cognitive technology in Audits can be drawn from KPMG East Africa’s IT Advisory team; Marvin Lijodi who wrote and I quote: “The Audit process can now use cognitive technology to conduct analysis of structured and unstructured data. A good example is the current ability of an auditor to capture information from non-traditional data sources (such as social media and the internet), process it together with the client’s financial records, and utilize advanced analytics to identify possible risks”.

Impact of Data Analytics (D&A)

It is also important at this point to appreciate the use of Data and analytics commonly referred to as D&A to perform audits. D&A can be narrowed down to the practice of analysing raw data and making conclusions from it. The techniques of data analytics have been automated into mechanical processes and algorithms that work over raw data for human consumption. This then entails that there is no need for auditors to worry about organising the raw data received from clients. Instead, the raw voluminous data can be collected as it is, put in an application system, an algorithm initiated and within no time, have the desired output. Ultimately Data Analytics will help a business reach its optimum performance.

From the above insights, one is left to wonder how the accounting industry would have thrived without the involvement of IT. Could it have been accurate? Could the decisions made leave much to be desired? How would the voluminous unstructured data be handled? Well, the adoption of Information technology has definitely ruled out many doubts as far as the decision-making process system of these firms is concerned.

Conclusion

Resolved, it is clear without any reasonable doubt that the accounting industry today boasts of many achievements such as:

  • More consistent output and less personnel
  • Timely and accurate data using high-level tech- applications
  • End-customer satisfaction and loyalty
  • Faster Turn-around- This is important for compliance filling as well as management reporting. For the latter, you will agree that stale data is not useful in making strategic business decisions but to mention a few.

All of this (and more) made possible because of the appreciation of the Information Technology discipline.

Apart from D&A and AI, we can rest assured that this is not all that technology has to offer to the accounting industry. It is safe to say that in a decade’s time, more complex technologies would have been created for the sole purpose of enhancing these accounting procedures.

It can be looked at this way, technology generally is built on the concept of GIGO (garbage-in-garbage-out) if a user inputs high-quality data, then the results of that data will be of high quality too and will be used in high-level decision-making processes thus, contributing to the general growth of the industry.

 

Chilombo Katongo is an IT professional at KPMG in Zambia. The views expressed in this article are his own and not necessarily those of KPMG.

  

References:

1) The role of IT in accounting By Associate Professor Seow Soh Po Sun

2) https://engage.smu.edu.sg/role-it-accounting

3) https://home.kpmg/au/en/home/media/press-releases/2016/06/ibm-watson-cognitive-technologies-investment-29-jun-2016.html

4) https://www.linkedin.com/posts/kpmgeastafrica_techtuesday-activity-6587282533229166593-UxKy

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